From Dream Home To Nightmare

We built our dream home in 2007, and up until the day before closing thought we were in heaven.  We found out the day before we closed that the good faith estimate on what our motgage was WAY off!  Like $1000 off. Not wanting to walk away from our dream and the money we put in to it, we signed. 

We put it up for sale right away, hoping that we could break even, and nothing. We kept up on the motgage for awhile, to the detrimate of our other obligations, but we could only keep it up for so long. We tried renegotiating our loan, but again…dead end.

We foreclosed on our home in Feb 08 (according to lender 2/12/08 was when forecloser was completed, and county record show transfer of title on loan happening at auction, 2/13/08).  We had a first and second mortgage.  We were defeated and tired. 

We moved and have started to rebound from the process.  We did a little reseach a few months prior to the foreclosure and found out that the home sold for more than we owed on the 1st and that the 2nd had “charged off” on our credit.  We called to find out how to help our credit due to the charge off and were told that we could settle for more money than we had available to us, or basically do nothing.  They (the mortgage lender) said that they would never persue the debt, but that it would stay on our credit. 

We just found out that we qualify for a VA Loan and that there wait after foreclosure is shorter than a conventional or FHA (2 years vs 3 years).  Excited and ready to move on, we started to check proir to the “timeline’, just to make sure we would be able to purchase another home.  So…found out that the “2 year” wait starts the day the foreclosure hits your credit, same with the the 2nd mortgage charge off. It is only 3 month shy of the “2 year” mark for us. But during my checking process I found out that up to 8 months after the foreclosure was reported my mortgage company continued to report me as late??? Can they do that?

They said that the sale wasn’t finalized until 10/08. But again, according to county records the title transfered from us to the buyer on 2/13/08.  Also, the second is continuing every month to report a charge off on my credit up to now!!  How can they do this? 

I understand that it is considered a debt that is still outstanding and that they have deemed it uncollectable, but how can they continue to “re-new” that debt? Is this legal? If I am trying to rebuild me and my families life after foreclosure, how am I to do that if the lender can continue to report me like it just happened?

I did contact the leaner,who by the way is the same for both mortgages and where originated at the same time, said that the 1st credit reporting months later was because of the sale not being complete until 8 months later.  And the 2nd, because we still “owe” the debt they can continue to report it.

I am so tired, please let me know what to do?  Fight…give up??

Defeated,
Gary and Jeni

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Hello Gary & Jeni,

It sounds like the property taxes were estimated based on land value only and then at closing they escrowed taxes based on the improved value.  Also, if the property was in Alabama, Iowa, Kansas, Michigan, or Minnesota, then there was a six month or longer redemption period post-foreclosure.  The second is not able to renew the debt for reporting obsolescence but they can continue to report the debt (each month) to the credit bureau until that date. 

You should give Brian Aber a call at HTDI to see what he can do for you.  Brian’s number is 877-877-4834 x704.  Tell him the Broken Credit Blog sent you.

Thanks for the questions and hope this helps.

Paul